AIG third quarter earnings dropped 60 percent

American International Group Inc (AIG) posted a steep decline in quarterly earnings on Monday.

The insurance giant posted third quarter after-tax operating income of $691 million, or 52 cents per share, down 60 percent from $1.19 per share in the same quarter last year.

Revenue dropped to $12.822 billion from $16.697 billion.

The results fell short of what analysts had expected of adjusted earnings of $1.03 per share, according to Thomson Reuters I/B/E/S.

AIG attributed the weak earnings to lower income on hedge fund investments and weaker than expected performance in its underwriting businesses. The insurer also incurred a $274 million pretax restructuring charge.

Total insurance earnings fell 41 percent in the third quarter compared to the previous year.

Income from its consumer and commercial insurance operations both declined. Commercial income fell 34 percent to $815 million, while consumer income plunged 48 percent to $657 million.

In a statement, AIG President and CEO Peter D. Hancock said, “This quarter’s results, while falling short of expectations due to market volatility, show signs that we are making progress to transform AIG for long-term competitiveness.”

The company plans on spending $500 million in restructuring initiatives through 2017. The reorganization of the business is expected to eventually save between $400 million to $500 million per year.

He added, “Our strategy focuses on four major objectives: to narrow our focus on businesses where we can grow profitably, drive for efficiency, grow through innovation and optimizing our data assets, and return excess capital.”

AIG also announced that it would pay a quarterly dividend of 28 cents per share, up from 12.5 cents per share last year.

Shares in the company fell more than 1 percent in extended trading hours.